Department of the Interior Secretary Ken Salazar and Bureau of Ocean Energy Management (BOEM) Director Tommy P. Beaudreau announced that BOEM will hold the first oil and natural gas lease sale in the Gulf of Mexico since the Deepwater Horizon explosion and oil spill. This announcement is consistent with steps President Obama announced in May, 2011 to expand domestic oil and gas production safely and responsibly.
This sale follows BOEM’s completion of a supplemental environmental impact statement analyzing the effects of the Deepwater Horizon spill on the Western Gulf of Mexico. Lease Sale 218 will be held in the Louisiana Superdome in downtown New Orleans on Dec. 14, 2011. The sale will include all available unleased areas in the Western Gulf Planning Area offshore Texas.
“This sale is an important step toward a secure energy future that includes safe, environmentally-sound development of our domestic energy resources that will continue to reduce our dependence on foreign oil and create jobs here at home,” Secretary Salazar said. “Since the Deepwater Horizon spill, we have strengthened oversight at every stage of the oil and gas development process, including deepwater drilling safety, subsea blowout containment, and spill response capability. Exploration and development of our Western Gulf’s vital energy resources will continue to help power our nation and drive our economy.”
“BOEM was established to oversee the responsible development of the nation’s offshore resources and to ensure a fair return for the American taxpayer through lease sales.” said Director Beaudreau. “We are committed to balanced decision-making by ensuring that appropriate consideration of the environment is given in every case. The decision to hold this sale was made after careful analysis of the best scientific information available regarding the effects of the Deepwater Horizon oil spill.”
Lease Sale 218, the last remaining Western Gulf Planning Area sale scheduled in the 2007-2012 Outer Continental Shelf (OCS) Oil and Natural Gas Leasing Program, encompasses 3,913 unleased blocks covering more than 21 million acres. The blocks are located from nine to about 250 miles offshore, in water depths ranging from 16 to more than 10,975 feet (5 to 3,346 meters). BOEM estimates the lease sale could result in the production of 222 to 423 million barrels of oil and 1.49 to 2.65 trillion cubic feet of natural gas.
The Final Notice of Sale (FNOS) gives the lease terms and economic conditions for this particular sale. It includes an increase in the minimum bid amount for blocks in water depths of 1,312 feet (400 meters) and greater from $37.50 to $100 per acre. The minimum bid amount for leases in the shallower water depths will remain at $25 per acre.
This change is based on a rigorous historical analysis of the last 15 years of lease sales in the Gulf of Mexico. The analysis, adjusted for energy prices at time of each sale, demonstrates that leases that received high bids of less than $100 per acre have experienced virtually no exploration and development activities. Raising the minimum bid will discourage companies from inventorying offshore acreage that they are unlikely to explore during the lease term.
The lease sale package also includes environmental stipulations requiring that operators protect biologically sensitive features, as well as marine mammals and sea turtles. These stipulations will require trained observers to ensure compliance and restrict operations when conditions warrant.
All terms and conditions for Western Sale 218 are detailed in the FNOS information package, which is available at: http://boem.gov/Oil-and-Gas-Energy-Program/Leasing/Regional-Leasing/Gulf-of-Mexico-Region/Lease-Sales/218/Proposed-Notice-of-Sale-218-Package.aspx. Copies can also be requested from the Gulf of Mexico Region’s Public Information Unit at 1201 Elmwood Park Boulevard, New Orleans, LA 70123, or at 800-200-GULF (4853).
The FNOS can be viewed today in the Federal Register at: http://www.ofr.gov/(X(1)S(jbdorpwoct2r0qdmnbo1nxyv))/OFRUpload/OFRData/2011-29340_PI.pdf.